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Sex sites fuel Web payoff
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January 20, 1998: 12:31 p.m. ET
Internet eroticism continues to be backbone that feeds online commerce
From Correspondent Steve Young
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NEW YORK (CNNfn) - As the Internet grows, there are an increasing number of exceptions to the rule that cyberspace is a bottomless pit into which money can be thrown for marginal returns.
Dell Computer makes hundreds of millions a year selling its PCs on the Internet, while Cisco has just topped $1 billion a year selling networking gear to other businesses.
However, most of the other estimated 1.5 million Web sites are money losers, except for the approximately 28,000 sites devoted to adult sexual content. Many -- if not most -- of these that operate on a pay basis are profitable.
Club Love, the signature Web site of the Internet Entertainment Group (IEG), is extremely profitable. According to IEG President Seth Warshavsky, it and its ancillary Internet businesses brought in $20 million last year and have practically cornered the market in providing online "live" sex shows.
"Probably the largest portion of our business is the live dancing shows that we provide on the 'net," Warshavsky says. "We have 10 of the hottest adult film actresses in the world under contract exclusively for the Internet."
IEG clients include Penthouse Magazine, which sells the material on its own Web site.
Even if it aims a little higher, sex on the Internet still sells. Online publishing venture Nerve magazine has published artful erotic photographs as well as erotic fiction by two Pulitzer-prize-winning authors.
Nerve's free Web site receives about 6 million page views a month, translating into approximately a regular readership of about a half million surfers. Six months after its launch the site still is losing money, but it expects to turn a profit with ad revenues in the next three or four months.
"Nerve is a magazine of exceptional writing and photography about sex that hopes finally to be a celebration about human sentience," says Rufus Griscom, Nerve editor-in-chief. "We hope to show that adult content online can be edifying and even inspiring and thought-provoking."
Griscom's approach is a sign that some elements of the cyber-erotic world are going mainstream. Nerve's second round of investors includes a journalist and a former vice president of Salomon Brothers. 
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